Saudi Arabia Basic Industries Corporation (SABIC) yesterday announced that its affiliate Chemya (the Jubail Petrochemical Company) has signed contracts marking the launch of a major expansion program to build a new low density polyethylene (ldpe) plant and an olefin cracker plant. Chemya is a fifty-fifty joint venture with Exxon Chemical Arabia Incorporated, a subsidiary of the U.S.-based Exxon Corporation.

Chemya's expansion project involves the construction of a 218,000 mt/y (metric tons per year) ldpe plant and an olefin cracker that will produce 700,000 mt/y of ethylene and 200,000 mt/y of propylene. It also includes upgrading the company's existing linear low density polyethylene (lldpe) plant in order to raise its capacity by nearly 40 per cent to 850,000 mt/y. SABIC's deputy chairman and managing director Ibrahim Ibn Salamah stated that the contract for the ldpe facility had been awarded to the Technimont group, and that construction is scheduled to be completed by March 2000, while the olefin cracker plant is set to be completed in late 2000, with the contract for this awarded to the Lummus group. In a related development, Chemya has mandated a consortium of local, regional and international banks to underwrite and arrange a U.S. $ 720 million facility to part-finance this major expansion project at its Al-Jubail complex. The financing facility is scheduled for closure in June 1998 and has a tenure of 8 years and six months. Deputy Chairman Ibn Salamah reported SABIC's pleasure at the readiness of financial institutions to finance its projects, saying: "We consider it as a sign of the confidence in the way SABIC is going about its business. It also shows that international banks have full confidence in Saudi Arabia's economic strength." He added that this expansion would make Chemya a fully integrated petrochemical company, with greater self-sufficiency in its requirements of ethylene feedstock, thus eliminating the need for external purchases. Chemya has also signed contracts with Parsons International and Saudi Arabian Parsons Limited, appointing the two companies as overall managing contractors for the expansion project.